Entity information:
NOTE 8 - INCOME TAXES

The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns.  The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law.  The effects of future changes in tax laws or rates are not anticipated.

At December 31, 2016, the Company has a net operating loss (“NOL”) that approximates $59 million.  Consequently, the Company may have NOL carryforwards available for federal income tax purposes, which would begin to expire in 2028.  Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income.

The income tax (benefit) provision consists of the following:

   
December 31,
  
   
2016
    
2015
  
Current
  
$
(1,655,000
)
  
$
(2,714,000
)
Deferred
    
(322,000
)
    
(402,000
)
Change in valuation allowance
    
1,977,000
      
3,116,000
  
                 
   
$
-
    
$
-
  
 

The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions:

   
December 31, 2016
    
December 31, 2015
  
   
Amount
    
%
    
Amount
    
%
  
U.S federal income tax benefit at
                        
Federal statutory rate
  
$
(1,689,000
)
    
(35
)
  
$
(2,681,000
)
    
(35
)
State tax, net of federal tax effect
    
(289,000
)
    
(6
)
    
(460,000
)
    
(6
)
Non-deductible share-based compensation
    
-
      
(0
)
    
-
      
(0
)
Non-deductible other expenses
    
1,000
      
-
      
25,000
      
-
  
Change in valuation allowance
    
1,977,000
      
41
      
3,116,000
      
41
  
                                 
Net
  
$
-
      
-
    
$
-
      
-
  
 
The primary components of the Company’s December 31, 2016 and 2015 deferred tax assets, liabilities and related valuation allowances are as follows:

   
December 31,
 
   
2016
    
2015
  
             
Deferred tax asset for NOL carryforwards
  
$
(24,084,000
)
  
$
(22,428,000
)
Deferred tax asset for stock based compensation
    
(2,560,000
)
    
(2,239,000
)
Valuation allowance
    
26,644,000
      
24,667,000
  
                 
Net
  
$
-
    
$
-